Lun 17 Jan 2011 13:01
Le mauvais élève est dans le collimateur
By Mutale Sokontwe
Sat 15 Jan. 2011, 04:00 CAT
Editor
I would like to comment on the article which appeared in The Post dated Friday January 7, 2011 titled “Dr Mpande urges removal of MMD over windfall tax”.
The tail end of the said article states: “Glencore buys the copper from its mine - Mopani Copper Mines...”
The good doctor is dead right. Glencore, the majority shareholders in Mopani have been buying copper cathodes from Mopani since privatisation in 2000 at the Mine Gate.
The question is, does the Zambian government know at what price Glencore buys Mopani Copper Cathodes? If the price paid by Glencore is lower than the price ruling at the London Metal Exchange (LME), then Mopani and indeed the nation is being short-changed.
It means our copper is being used for speculative purposes, that is, Glencore dictates a cheap price at the Mine Gate and holds on to our copper only to sell at ‘windfall price’ in not too distant a future.
Meanwhile, Zambians or rather the Zambian ministers responsible are just on the defensive and sit and watch! Something is not right can’t you see?
It is fallacious to suggest that the government can raise the same amount of tax from variable profit tax as they would from windfall tax based on graduated price of copper.
The reason is simple and competent commentators have alluded to this before: Zambia Revenue Authority (ZRA) have no capacity, they just don’t have the requisite competences to vouch for the accuracy, or otherwise, of the profit figure submitted by the mines for tax purposes.
To do a proper audit of the books of account for the mines, ZRA would need to understand the accounting systems used on the mines and they are quite complex.
I recall in the eighties and nineties when Delloite used to audit the mines, they had to permanently set up an office at Mutondo House just for them to understand ZCCM accounting systems.
Only then where they able to conduct an efficient and effective audit on the financial statements for the mines.
The mines can easily avoid tax by charging all sorts of cost items against the profit and ZRA won’t have the slightest clue on how to detect these items. Remember tax avoidance is legal, what is illegal is tax evasion.
You only need to draw lessons from the recent global credit crunch which clearly showed that governments in the West were wrong to have had confidence in the so-called ‘too big to fail’ companies like Lehman Brothers to provide the correct information about their operations, they didn’t! It is therefore suicidal to expect mine operators to declare a really true and fair profit figure for tax purposes to ZRA.
Forget about external auditors.
After all, they too look forward to having their appointment renewed at the next AGM and therefore don’t want to antagonise their future employer by qualifying the accounts. Moreover, audit appointments don’t come that easily.
I therefore concur with Dr Mpande that as long as the MMD is in charge in this country, Zambians will keep wallowing in poverty while the price of their copper reaches an all-time high at US$10,000.00 per tonne and the MMD government just watches the investors go to the bank smiling. This is treacherous!
By the way, at the time of privatisation the price of copper was about 60 cents per pound or US$1,320.00 per tonne. Compare 10,000.00 and 1,320.
Common sense, not a degree let alone a doctorate will tell you what to do? Chew part of the $10,000! After all it’s yours.
Mutale Sokontwe,
Kitwe
http://www.postzambia.com/post-read_art ... leId=17302
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( Pierre Mac Orlan )
( Pierre Mac Orlan )
